Plaid Cymru, the Party Of Wales, news, comment, opinion and observations from the South East corner of the old historic county of Gwent...

Friday, 26 July 2013

THE WAY TO GO

The news
that the number of new limited companies registered in Wales has gone up by
more than 20% is good news. Companies House say 469 new firms were registered
with them in 2012, when compared with 386 in 2011. This increase is actually higher than the UK average but it has to be balanced by the sobering news that the
number of company failures in Wales also rose when they fell on average across
the UK.

A number
of my friends run their own businesses, so I am fully aware of the pitfalls and
the opportunities that can await anyone who goes into business for themselves. With
a good idea, a sound business case, timely support and advice it can work out.
Our small businesses can create wealth and sustainable employment opportunities
for local people and play a significant role at the heart of our communities. Their
profits and investments tend to stay within the communities where they are
based.

For too
many years economic development in Wales has been focused on large scale
development of what can be best described a single egg solutions. They promise
much in the short to medium term yet often deliver significantly less over the
long term, if they survive. The latest figures
show that Wales saw a 191% rise in the number of projects, by way of comparison
with a 41% increase in Northern Ireland, a 16% rise in Scotland and a 10%
increase in England (outside of London).

The statistics have been released by UK Trade andInvestment (UKTI), the Westminster government department responsible for exports
and inward investment. There is no
breakdown of the number of jobs created or safeguarded (in Wales) by these
projects; the BBC says that Welsh government says they created of 2,605 jobs
and safeguarded another 4,442 in the 2012/13 financial year.

Despite rise in the number of projects, Wales' share of the UK total inward
investment accounts for 4%, is much lower than the high point of the 1980s and 1990s.
Now this is good news, but, our focus should be on developing small to
medium size local businesses, which are significantly less likely to up sticks
and leave for perceived greener pastures and fresh applications of development
grants.

We are
still too focused on attracting large scale single enterprises, which promise
much but deliver significantly less than anticipated. The LG development near
Newport, is a good example of an expensive white elephant which promised the
usual total of 6,000 jobs and accrued significant public funding (£376 million
pounds at the last count) which was committed by the then Welsh Secretary,
William Hague.

The
promises and the pledges and the public funding
never quite managed to deliver anything like what was promised. While
anyone with a basic understanding of the
state of the Korean and the Far Eastern economies at the time that, let alone a
basic understanding of where technological developments was going in relation
to PC monitor screens, would have put their hands up and said hang on a moment.

What can best be described as a combination of fantasy island economic
assessments, a fatally flawed business case and the prospect of looking good
with a forthcoming Westminster election looming led to one of the spectacularly
duller decisions of recent years being made. The old WDA had in truth never
really consistently delivered anything like long term economic stability and
much needed long term job opportunities to our communities that it should have
done.

The European funding opportunities available to Wales (as a result of economic
mismanagement on the part of successive Westminster governments) may well turn
out to have been squandered on schemes that fail to deliver measurable results
yet manage to deliver fat salaries to the managers. Much of the money has been
scammed into dubious schemes and training programmes that fail to deliver the
necessary skills that workers and potential workers need to make a decent
living in the modern economy.

Anyone
who has visited Spain and Ireland prior to the self inflicted banking crash
will have seen (and can see) the results of years of European regional
investment the question we should be asking is where are the physical assets?
By this I mean the things you can literally put your hand on like improved
communications (rail, railway stations, etc), broadband infrastructure, etc?

The
Westminster, Welsh Office, WDA model of concentrating on attracting branch
factory operations of a relative short term duration has failed to develop and
sustain our economy. Back between 2007 and 2011 the Plaid driven One Wales
Government made significant efforts and tried to think and act differently when
it comes to economic development and support for small to medium sized
enterprises.

Small
businesses should be the life blood of our urban centres, yet, the Federation
of Small Businesses (FSB) has long noted that the UK is losing around 2,000
local shops every year and that of this rate of loss is dangerously
unacceptable. In a few years unless things change there will be precious few no
independent retailers left in business, something that will hammer both
consumers and our communities hard as they lose any real choice in the
marketplace and lose potential job opportunities.

Now as someone who now and then takes the bus
to work and walks through streets that were once the retail heart of Newport
(nominally Wales’s third largest city) I can see with my own eyes the economic
realities of our situation. Over the last twenty five years the commercial
heart of many of our communities has been shattered as a result of a
combination of aggressive policies pursued by the larger retail chains,
exceptionally poor decision making on the part of local government and central
government indifference.

This combined with the rapid growth of unsustainable, ill-thought out of and
edge of town retail developments has effectively left no place for the smaller
local businesses and retailers. When you factor in parking charges, business
rates and the effect of the closure of high street banks and post offices in
many of our communities then you can begin to see why many of our smaller
businesses and local shopping centres are up against it.

Local small businesses as well as trading
with us the consumers, also trade with each other - so the community gets twice
the benefit. Money spent by and in local businesses spends on average three
times longer in the local economy than that spent with chain stores which is
instantly lost to the local economy which in times of recession our communities
can ill afford. We really do need to think differently and focus economic development
priorities on developing and supporting smaller local businesses who will be
rooted in our communities and offer more flexible employment opportunities too
our people.

The Welsh Government needs to have the power (and the vision) to remove or reduce
business taxes to help boost our businesses, to encourage investment in skills,
technology and workers. If we are going
to make Wales a nation of aspiring entrepreneurs and to encourage and enable
them, our communities and our economy to flourish we also need to encourage the
development of community owned social enterprises.

A few years ago the Rowlands review into the provision of growth capital
recognised that an economical vibrant SME sector is vital for economic growth.
There has been a lack of provision for companies in Wales who were looking for
between £2 and £10 million pounds in capital, this has to change if we are to
encourage sustainable economic growth and development.

It’s pretty clear that the present financial market and its institutions have
failed to supply sufficient venture capital for the SME sector in Wales. We
need a venture capital fund for Wales, which should be established by, but
independent of the Welsh Government. Such an independent venture capital fund
could raise capital and deliver investment through a co-investment model, with
approved private sector partners to our SME sector, where such investment would
make a real difference.

Despite nearly 15 years of devolution much of the same old mid to late twentieth
century economic thinking lingers at the heart of the Welsh Government when it
comes to economic development. There is still far too much focus on vastly
expensive one egg, one basket schemes to generate the seemingly standard figure
of 6,000 jobs which seems to haunt government press releases whether we are
talking about the Severn Barrage, the Severnside airport , the M4 relief road
or whatever.

We badly need new ideas not just talk, we
need some concrete steps to encourage growth, boost manufacturing industry,
support and develop our small to medium
sized enterprises. One positive step would be to end business rates and that's
just to start with... otherwise it will just be a case of same old twaddle
which will do nothing to help our communities and our economy.

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Jonathan T Clark

About Me

A former journalist, and a former IT Professional, I am interested in social justice, the growing problem of a lack of affordable housing, energy independence, land tenure, public access, law and order, equal pay, integrated public transport, our economy, the consequences of the former war on terror and enduring threats to civil liberties. I have a passing interest in the consequences of Peak Everything. Amongst my other interests are Archaeology, history, politics not to mention Newport County and the Gwent Dragons. I have been actively involved in pretty much every Plaid campaign in the South East one way or another since 1998 Any blog postings contain only my personal views and are published in an entirely personal capacity.